Written by: Alice Richardson

Construction Industry Scheme – FAQs 23/24

What is the construction industry scheme?

Contractors and subcontractors in the construction industry must abide by certain rules set out under the construction industry scheme. This scheme allows the contractor to deduct money from a subcontractor’s payment and pass it on to HMRC. The deductions count as advance payments towards the subcontractor’s tax and national insurance.

To apply for CIS, the contractor must pay subcontractors for construction work or if your business does operate not in the construction industry, but you have spent more than £3 million on construction in the last 12 months.

What work is covered by CIS?
Most construction work is covered by the scheme including:

Preparing the site
Demolition work
Building work
Alterations, repairs, and decorating
Installation of heating, lighting, power, water, and ventilation
Cleaning inside of a building following construction work

There are however exceptions, you will not have to register for certain jobs which include:

Architecture and surveying
Scaffolding hire, though you must register for the CIS if you are hiring a subcontractor to install the structure
Carpet fitting
Materials delivery
Work on construction sites such as running a canteen or site facilities

As a contractor what should I do?

If you hire subcontractors, you must register as a contractor with HMRC. You are responsible for deducting CIS from your subcontractor’s paymentsand for paying this to HMRC.

Before you pay a subcontractor, you must verify them with HMRC using their UTR number. You do not deduct CIS from materials.

As a subcontractor what should I do?

If you provide labour to a contractor, you must register as a subcontractor with HMRC and ensure you receive a UTR. The contractor will need this information to verify you.

The contractor will deduct CIS from your payments and pay these amounts directly to HMRC which means you won’t need to worry about your tax and national insurance.

How do I get the CIS back?

If you’re an employer as well as a subcontractor, you can offset the CIS you pay against the tax and national insurance liabilities you owe to HMRC.

If you’re not an employer, you can offset your CIS suffered against your corporation tax bill. If you do not owe any corporation tax and have no outstanding balances with HMRCyou can apply for the CIS you have suffered to be return to you after the end of the tax year (5^th April).

If you’re a sole trader, you can offset the CIS paid during the year against your self-assessment tax bill.

Top things to do for CIS companies.

If as a contractor in the construction industry you subscribe to the CIS, there are things you must do to stay compliant with the regulations.

These are:

Keeping copies of all invoices received from subcontractors.
Verifying subcontractors before making payment.
Calculating the amount of CIS to withhold.
Preparing a monthly CIS return and file with HMRC.
Paying the deductions to HMRC.
Keeping copies of all CIS amounts suffered.
If you’re an employer, prepare an EPS for amounts paid.

Get in touch with our team if you have any questions about the CIS or need help with communicating with the HMRC.